The main legal point established in the judgment is the entitlement to interest as a compensation for being deprived of the use of the amounts due, even in cases where there is no statutory provision for payment of interest.

JUDGMENT

Vibhu Bakhru, J. (Oral)--The petitioner has filed the present petition, inter alia, claiming interest on the amount of Rs.68,37,488/-.

2. By an order dated 04.10.2021, a refund of Rs.1,12,98,201/- was sanctioned. This comprised of Rs.44,60,713/- on account of State Goods and Services Tax (SGST); Rs.44,60,713/- on account of Central Goods and Services Tax (CGST), and Rs.23,76,775/- on account of Integrated Goods and Services Tax (IGST).

3. The refund of SGST for the amount of Rs.44,60,713/- was processed and disbursed on 09.03.2022. However, the refund of CGST and IGST was not processed despite the refund order dated 04.10.2021, sanctioning the same. This led the petitioner to file the present petition, inter alia, claiming a refund of Rs.68,37,488/- (Rs.44,60,713/- being CGST and Rs.23,76,775/- being IGST). The advance copy of the present writ petition was served on the concerned authorities on 21.04.2023. Apparently, this galvanized the concerned authorities to take steps and disburse the amount of refund that was sanctioned on 04.10.2021. A letter informing the petitioner of disbursal of the said amount was issued on 23.04.2023 and the said amount was credited into the petitioner's bank account on 27.04.2023.

4. The issue involved in the present case is now confined to the interest payable on the said amount. Although the petitioner had also challenged the notification bearing no. 13/2017-Central Tax dated 28.06.2017, whereby the interest rate on delayed refund was fixed at 6% per annum, the said relief is not pressed as noted in the order dated 01.05.2023.

5. Learned counsel for the petitioner also submits that there are two components of its claim for interest: one for the interest prior to 04.10.2021 and, second, for delayed payment on the sum of Rs.68,37,488/- after the said refund sanction order was passed.

6. In so far as the first component is concerned, learned counsel for the petitioner states that the petitioner has already filed an appeal before the concerned authority and the same is pending. He fairly states that since the petitioner has availed of an alternate remedy in this regard, he would not press for interest for the period prior to 04.10.2021 in this petition, while reserving the petitioner's right to do so in the pending appeal.

7. He, however, requests that directions be issued for an expeditious disposal of the petitioner's appeal.

8. In so far as the interest for the period commencing from 04.10.2021 is concerned, this Court had expressed its prima facie view in the order dated 01.05.2023, that the same would be payable as there has been an inordinate delay in disbursing the refund.

9. Mr. R. Ramachandran, learned counsel for the respondents submits that the concerned department is unable to process the refund as there is no statutory provision for grant of this refund.

10. Interest is essentially a compensation to a person who has been deprived of use of the amounts due to him. It is relevant to refer to the following observations made by the Supreme Court in Union of India v. Tata Chemicals Ltd., (2014) 6 SCC 335:

"38. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there-being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under